Intellectual Discovery disposes of portfolio to US NPE as patent sell off continues

2017-10-20

Korean sovereign patent fund Intellectual Discovery (ID) has continued its recent trend of selling assets to US licensing entities, with the disposal of a package of 15 US patents to a company called Compact Lens Technologies LLC. The transaction was recorded on the USPTO assignment database earlier this month.

The buyer appears to be controlled by IP Valuation Partners, a Texas-based IP advisory business led by a group of former IPNav and Dominion Harbor executives. Jonathan Szarzynski, whose name is listed on the assignment document is, according to this site, the manager of Compact Lens Technologies. The portfolio of assets relates to camera lens technology.

ID has experienced a fair degree of turmoil in recent years with a change in leadership and reported budget cuts. In response it has been looking to offload assets, including a portfolio to Document Security Systems (DSS) which has a well established IP licensing arm. Last year DSS picked up a stockpile of assets that were originally developed by Avago before being sold to ID. As this blog reported at the time the US PIPCO had agreed a $13.5 million financing package for an assertion campaign with litigation funder Juridica Asset Management which included a tranche of $4.5 million specifically for defending inter partes reviews (IPR). Since then DSS has filed lawsuits in US district court against several companies including Cree, Everlight and Seoul Semiconductor.

The financial terms of the deal between ID and Compact Lens Technologies are not clear, but if they’re anything like the Korean fund’s agreement with DSS then they would reflect a classic privateering play. Under the terms of that agreement ID is due to receive a cut of any licensing income once Juridica has been paid off, in a deal structure which has become the norm for patent transactions involving NPEs.

As well as its ties to Compact Lens Technologies, IP Valuation also appears to be linked to several other licensing businesses including Seneca IP Licensing, which earlier this year picked up one US grant from Japanese gaming company Universal Entertainment Corporation. That patent was asserted earlier this month in two separate cases in the Eastern District of Texas against Oki Data Americas and Konica Minolta Business Solutions.

The deal with IP Valuation shows that for all the hurdles that licensors face in the US in realising a return from their IP, there are still numerous buyers looking to pick up assets that remain exceedingly cheap (another product of the tough market). While the PIPCO model proliferated around five years ago, recent troubles with the model - which have seen the likes of Inventergy and Marathon Patent Group surrender assets to Fortress as they struggled to repay debt - have convinced many that the future of NPEs in the US lies in private hands.

That has led to the emergence of companies like Dominion Harbor, which was formed in 2013 by a group of former IPNav execs and in February was involved in one of the biggest deals of the year so far when it acquired a portfolio of around 4000 former Kodak assets from Intellectual Ventures. With several large patent owners like ID and IV looking to dispose of assets the new breed of private NPEs are certainly not struggling for buying opportunities.